U.S. Trade Representative Rob Portman’s proposal to eliminate U.S. agricultural export subsidies and cut farm price supports by more than half by 2010 is generally winning praise from farm organizations and Congress.
But some of those groups and the chairman of the Senate Agriculture Committee are demanding that any reductions in U.S. subsidies for a new WTO agreement must be matched by increased access to other countries’ markets.
Portman’s plan, outlined in an article in the Financial Times before it was tabled at a meeting of Doha Round negotiators in Zurich, Switzerland, Oct. 10, also called for tariff reductions of 55 to 90 percent by other WTO members and restrictions on WTO litigation activities.
Sen. Saxby Chambliss, R-Ga., chairman of the Senate Agriculture Committee, called the U.S. proposal “bold and ambitious,” but reminded WTO members that Congress, not members of a WTO dispute panel, would write the next U.S. farm bill in 2007.
“The offer now out on the table will require real cuts and reforms to our domestic support programs,” he said in a statement. “The European Union and negotiators from other countries should recognize this and follow through with equally ambitious proposals on market access.”
Chambliss said other countries should not think the United States will reduce its subsidies regardless of whether other countries lower their tariffs and eliminate other trade barriers such as non-scientific sanitary and phytosanitary regulations.
“Let me reiterate that Congress will be writing the next farm bill in 2007, and U.S. agriculture will not disarm unilaterally,” he said. “If other countries do not harmonize their levels of domestic support and provide meaningful and tangible market access, then the Senate and House will find it very difficult to support the final agreement.”
Later, Chambliss’ staff released a two-page letter from Chambliss to Agriculture Secretary Mike Johanns, spelling out more details about Chambliss’ concerns. (See accompanying article.)
Farm organizations such as the American Soybean Association said they were encouraged by Portman’s efforts to move the Doha Round talks along ahead of a Dec. 14 ministerial meeting in Hong Kong but questioned why more wasn’t being done to focus attention on developing countries.
“We recognize the proposal advanced by the administration today in Zurich sends a credible signal to the rest of the world that the United States is prepared to make substantial cuts in trade-distorting domestic support,” said ASA President Bob Metz, a soybean producer from West Browns Valley, S. D. “But that is if and, only if, market access barriers are greatly reduced and export subsidy practices are eliminated.”
Metz said the ASA wants to see major improvements in real market access in both developed and developing countries; major improvements in export and domestic support policies of world-class exporters such as Brazil, Argentina and Malaysia; and a farm program safety net that is beyond WTO challenge and does not distort planting signals from the world market.
“The proposed cuts in trade-distorting domestic support would necessitate fundamental changes in the structure of U.S. farm programs, including the marketing loan, which has been critical in supporting soybean producer income when prices fall,” Metz noted. “Likewise, the proposed cuts in market access barriers to trade by developed countries would be substantial and could expand U.S. soy and meat exports to developed countries.”
Metz said developing countries comprise 81 percent of the world’s population, and their populations and incomes are rising faster than in developed countries. “Moreover, per capita consumption of vegetable oil and meat products is much lower in developing countries, and has the greatest potential to increase. It is critical that these countries open their markets for trade with each other, as well as with developed countries.”
ASA also notes that the U.S. proposal does not include specific language requiring world-class developing country exporters to undertake disciplines on their domestic support and export subsidy programs similar to those required of developed countries.
USA Rice Federation leaders also said they supported Portman’s “aggressive” comprehensive negotiating proposal for moving the Doha Round forward but remained cautious of the proposal’s implications for agriculture, particularly rice. They urged U.S. negotiators to remain focused on the key goal – real and sustainable market access gains as a condition for any cuts in U.S. domestic supports.
“Ambassador Portman took a necessary step in leading World Trade Organization members to the next, more intensive level of negotiations,” said Carl Brothers, chairman of USA Rice’s International Trade Policy Committee and senior vice president, Riceland Foods Inc., in Stuttgart, Ark.
“The rice industry needs to remain vigilant and to hold U.S. negotiators to their commitment that any offers to cut U.S. farm programs are conditional on meaningful and enforceable market access openings and subsidy cuts in other countries.”
While rice growers want to see tariff reductions and a “peace clause” to protect against more WTO cases such as that brought by Brazil, they still have many questions about Portman’s proposal, said Paul Combs, a Kennett, Mo., rice producer and chairman of the USA Rice Producers’ Group.
“In addition to high tariffs, U.S. rice exports have long suffered non-tariff trade barriers from countries that treat rice as a sensitive commodity and from ineffective implementation of existing trade agreements,” he said. “Our producers, millers and marketers always seem to have one hand tied behind their backs, a handicap that’s made worse by unilateral U.S. trade sanctions.”
National Cotton Council leaders said the proposal represents “a very aggressive stance” by the United States in the Doha negotiations and one that would require significant cuts in U.S. farm programs if agreed to by the Members of the World Trade Organization (WTO) and the U.S. Congress.
“The scope of the U.S. domestic support proposal would likely bring comprehensive change for most developed countries, including U.S. agriculture,” said Woods Eastland, Council chairman. “There must be corresponding gains in market access, particularly changes in market access to China.
“The troubling aspect for the U.S. cotton industry is that China – the world’s largest cotton market – continues to seek special treatment in the WTO so it can avoid market access concessions. On a broader scale, we can not allow countries with highly competitive agricultural products and value-added goods in export markets to avoid making concessions simply based on their self-declaration as a developing country.”
Eastland, CEO of Staplcotn cooperative in Greenwood, Miss., commended the U.S. negotiators for including a provision protecting compliant programs from litigation.
“The U.S. proposal contains a provision that will protect countries from litigation in the WTO if they keep their trade-distorting support below agreed levels,” Eastland said. “This is an extremely important and critical component of the U.S. proposal.”
Eastland said the U.S. government must “maintain the integrity of the current farm law as we analyze potential mechanisms that would enable us to comply with new obligations stemming from any eventual agreement. Longer term, due to the unpredictable nature of agricultural production and the inherent volatility in commodity prices, it is imperative that any agreement provides Congress an opportunity to maintain a program that provides an effective safety net for U.S. producers.”
American Farm Bureau President Bob Stallman also urged Portman and Agriculture Secretary Johanns to push for increased market access for U.S. farm products “that would be worthy of further reform in the area of U.S. domestic supports.
“The administration’s proposal to address these areas of trade policy also will help us frame the discussion regarding the next U.S. farm bill,” he said. “Changes in domestic support programs resulting from an agreement will result in short-term economic challenges for some commodities and specific farm types. We believe, however, U.S. agriculture will overcome any challenge through the expanded opportunity for exports created by specific and measurable improvements in market access.”
The National Farmers Union, meanwhile, saw little, if any, good in the Portman proposal.
“The USTR proposal would significantly alter, if not eliminate, much of the current safety net for U.S. farmers and ranchers without getting anything meaningful in return,” said NFU President Dave Frederickson. “Right now the U.S. farm economy is deteriorating rapidly as a result of low commodity prices and skyrocketing input costs.
“Offering to give up our safety net at this time is not sound policy for rural America.”
Frederickson said the plan would allow the European Union to retain a two-to-one edge in the level of domestic support it provides its farmers and does not to address trade issues with developing countries that have developed agriculture.